The crypto market has just gone through one of its biggest shakeouts of the cycle, with long positions worth over $1 billion liquidated in a single hour. The sudden wipeout left traders reeling, as fears of inflation and central bank tightening pushed capital away from riskier assets like Bitcoin and Ethereum.
A Brutal Liquidation Wave
According to data from CoinGlass, over 406,000 traders were liquidated in the past 24 hours, with total liquidations climbing to $1.74 billion. Of that, $1.04 billion came from long positions alone—accounting for more than 95% of the total.
Bybit led the carnage, recording $712 million in forced sell-offs. Ethereum bore the brunt of the crash with $309 million in liquidations, while Bitcoin followed with $214 million during the same hour.
This marks one of the sharpest liquidation events since February 2025, when $2.2 billion in positions were wiped out in just 24 hours, primarily from overleveraged longs.
Why Did This Happen?
The trigger this time was monetary policy. Rising interest rate expectations are weighing heavily on risk assets, making safer investments like bonds and savings accounts more appealing.
Last week, the Federal Reserve cut interest rates by 25 basis points, sparking a short-lived crypto rally. But renewed inflation fears and tightening signals from global central banks quickly erased those gains. Gulf central banks followed the Fed with their own cuts, yet investor sentiment remained cautious, accelerating the shift out of digital assets.
On September 22, Bitcoin tumbled below $115,000, sliding from around $114,400 to nearly $112,000 in minutes before settling near $112,900. That sharp drop unleashed a cascade of forced liquidations, driving Bitcoin’s RSI deep into oversold territory falling below 20 at one point, a level rarely seen outside liquidation-driven crashes.
Lessons in Leverage
Historically, long traders have shouldered the heaviest liquidation losses in crypto, often far exceeding margin wipeouts seen in traditional equity markets. The latest crash underscores once again how fragile highly leveraged positions can be during sudden volatility.
Bybit’s CEO previously estimated that in past liquidation waves, actual global losses often surpass exchange data, reaching $8–10 billion when accounting for cascading effects.
With the latest rout, traders are being reminded that leverage cuts both ways magnifying gains during rallies, but crushing positions during downturns.
